Xinhua Insight: Property bubble will not wreck China's economy

BEIJING, April 26 (Xinhua) -- Economists from China's leading think tanks have dismissed predictions that a possible property meltdown would trigger a crisis or even a crash in the world's second largest economy.

"It can be said that China's property bubbles are now the biggest risk in its economy, but bearish talk of a collapse of the whole economy smells of ulterior motives," Wang Xiaoguang, a researcher at the Chinese Academy of Governance, told Xinhua.

REASON FOR CONCERN

Concerns over China's housing market which had been sizzling during the past three or four years may be well-founded, as latest official data showed home prices continued to cool in some cities.

In March, of a statistical pool of 70 major Chinese cities, 14 saw home prices either decline or stagnate on a monthly basis, the highest figure since early 2013. The average growth rate of the cities dipped to the lowest level for the past 15 months.

After large expansion, it is natural that China's real estate market brims with risks, and, given the sector's "great contribution" to the economy, reining in property risks would be crucial to maintaining the health of the country's financial system.

Wang pointed to the close ties between the property sector and shadow banking as a major reason for concerns, not least because risks in China's financial system already started to emerge as bad loans increased.

Jia Kang, director of the Research Institute for Fiscal Science at China's Ministry of Finance, warned against the "divergence" in China's housing market.

"In big cities like Beijing and Shanghai, the risks of the property market are not so big. But some other cities which are experiencing falling home prices have to be careful," Jia told Xinhua.